11/27/2006 @ 12:00PM

Facing Facts At Pfizer

On Thursday,
Pfizer
will show investors the experimental drugs emerging from its $7 billion annual research effort. At the same time, new Chief Executive
Jeffrey
Kindler
Jeffrey Kindler
is expected to outline his plans for the world’s biggest drug firm, which is facing flat sales growth due to patent expirations. He is also likely to avoid appearing overly optimistic and to show Wall Street he is willing to cut costs.

But whatever schemes Kindler details, investors are likely to zero in on a single product: torcetrapib, Pfizer’s
experimental pill to raise good cholesterol.

Current cholesterol pills aim mostly to lower the bad cholesterol, known as LDL, and are proven to prevent heart attacks and strokes. Pfizer’s Lipitor is the current best seller, with annual sales of $12 billion. But Lipitor’s patent may expire as early as 2010, blighting Pfizer’s earnings. Torcetrapib would be the first drug to raise HDL, the good cholesterol, potentially preventing even more heart attacks than Lipitor alone. At first, it might be sold only in combination with Lipitor, forcing patients onto the combo pill and further dulling the damage to Pfizer’s earnings. (See: “Pfizer’s Big Bet.”)

Hank McKinnell, Kindler’s predecessor, told analysts that the tests of torcetrapib were the biggest ever for a drug: Pfizer has said they are costing a whopping $800 million. He also talked up the potential for blockbuster sales. “The market could be as big as Lipitor’s,” he told Forbes in 2001, “and we may have the only product.”

But now
Roche
has a very similar competing drug that is only a few years behind. (See: “Pfizer’s Next Problem.”) And doctors and analysts think
Merck
has one as well–although nobody has a clue what stage of development that pill is in.

Even worse, torcetrapib has an unwelcome side effect: It raises blood pressure. The side effect first came to light two years ago. (See: “Pfizer’s High Blood Pressure.”) But new data from a recent study seemed to show that the blood pressure elevation–an average of 4 millimeters of mercury–was bigger than expected.

That’s a problem, because Pfizer hoped to get torcetrapib past regulators not by proving it saves lives or prevents heart attacks but with studies that aim to show that it clears plaque out of the arteries. The first of these studies is expected in March 2007, three years before a larger trial to prove its benefits will finish.

Pfizer Hopes: Promising Experimental Drugs

Drug

Treats

How it works

Risk

Torcetrapib

Heart disease

Boosts HDL, the good cholesterol

Also raises blood pressure slightly

Maraviroc

HIV

Prevents virus from entering white blood cells

Some researchers reportedly fear immune system side effects.

Ticilimumab

Melanoma

Causes immune system to kill cancer cells

Awaiting final-stage results; Bristol-Myers making competitor

PF-3512676

Non-small cell lung cancer

Causes immune system to kill cancer cells

Still early days

Sources: Pfizer, press reports, Forbes

The technique for measuring artery plaque, pioneered by top Cleveland Clinic cardiologist Steven Nissen, seems to be useful for predicting which drugs prevent heart attacks. But Nissen himself has done trials showing tiny increases in blood pressure put the heart at risk. Sanjay Kaul, a cardiologist at Cedars-Sinai Medical Center, says that even if the drug clears away lots of plaque, “the question still remains” whether it prevents heart attacks, strokes and deaths.

Daniel Rader, a cholesterol guru at the University of Pennsylvania, says it is possible that the blood pressure increase might just mean the drug wouldn’t be right for some patients, but could still be used for others. “It’s an easily measurable thing,” he says. “When you pick it up, you stop the drug.” Another approach, raised by Barbara Ryan at Deutsche Bank, is to market torcetrapib only with high doses of Lipitor, making certain only very sick heart patients take it.

What can investors expect to learn about the blood pressure side effect at Thursday’s meeting? For the first time, Pfizer will present the full data showing the blood pressure increase. One key question: Does the drug increase blood pressure for some people, or for everyone? Another: Are the increases always slight, or do some patients see truly scary jumps in blood pressure?

The reality, though, is that many of these questions will continue to linger at least until the full torcetrapib data is presented in March. In the meantime, Pfizer will try to hype other experimental prospects. So far, results have been mixed–particularly with drugs it licensed or bought from other drugmakers. Being a “partner of choice” for other drug firms was a key strategy under McKinnell.

But drug licensing fell flat even as Pfizer spent billions of dollars. In 2002, Pfizer paid $100 million to
Neurocrine Biosciences
to co-develop a sleeping pill similar to Sanofi-Aventis‘
Ambien and Sepracor‘s
Lunesta. After the U.S. Food and Drug Administration rejected a key dose, Pfizer dropped the drug.

In October 2003, Pfizer bought Esperion Therapeutics for $1.3 billion in cash. The biotech had set the cardiology world on fire with a synthetic version of HDL that was the first experimental drug to clear plaque out of the arteries. (See: “Pfizer to Buy Artery Drano.”) Three years later, the big-stage trials needed for approval still don’t seem to have begun. Also in 2003, Pfizer paid
Akzo Nobel
$100 million to co-market a schizophrenia drug that has been delayed after mixed late-stage results.

In June 2005, Pfizer bought antibiotic-maker Vicuron for $1.9 billion in cash. One of the firm’s drugs, for bloodstream fungal infections, has been approved but is not exciting Wall Street. A second, a hospital antibiotic, was expected to be approved in October 2005. It is still not on the market. (See: “Pfizer Plays a Guessing Game.”)

Already, Kindler has been dialing back expectations, promising that there will be “no sacred cows” and that Pfizer will be honest about what it needs to do. On Thursday, investors will get a slightly better idea exactly what cards the new CEO is holding.

Pfizer says those with questions on these issues should pay attention to the meeting. “We will discuss those topics and much more during the meeting,” says Pfizer spokesman Paul Fitzhenry. “This will be a deep focus on Pfizer’s strong science and the companys pipeline.”